Fee-only financial planners are investment advisors with a fiduciary responsibility to act in their clients’ best interest. Fee-only means that they do not accept any compensation based on product or fund sales. Fee-only advisors have fewer inherent conflicts of interest, and they generally provide more comprehensive advice that is in the clients best interest. Fee only advice is now becoming the norm in many developed and regulated markets unfortunately Fee-only advice is extremely rare in the expatriate market place with most advisory companies still offering a purely Commission-Based or Fee-Based services which can be a minefield for clients.

Fee-Based Is Not the Same As Fee-Only

Commission-based agents and brokers often take offense at this distinction. Blurring the difference, they created the category dubbed “fee based,” which means they charge a fee in addition to collecting commissions from the provider of a product or fund. Studies show that even consumers seeking a strictly fee-only advisor find these terms extremely confusing especially when these commissions are often not disclosed to an investor.

Bloomberg reports that an international financial advisory company has charged upfront commissions for years on investments to UK expats, even though its SEC registration didn’t allow such commissions.

There were a lot of charges. In addition to an annual management fee, the company would charge a fee on the pension transfer that could be as high as 7%, spread over several years (known in the industry as an ‘indemnity commission’), three former employees said. Clients who transferred pensions would have to decide how to invest the money, giving salesmen another chance to earn commissions.